What: Kering's net profit plunged 50% in the first half of the year, prompting a new profit warning due to a drastic slowdown in luxury spending.

Why it is important: This significant drop in profit highlights the challenges faced by even top luxury brands in the current volatile market, underscoring the impact of economic uncertainties and shifting consumer behaviours on high-end retailers.

Kering, the parent company of luxury brands such as Gucci, Saint Laurent, and Balenciaga, has issued a new profit warning after its net profit halved to EUR 878 million in the first half of 2024. Organic sales at Gucci, Kering's flagship brand, fell by 19% in the second quarter, significantly below market expectations. The company attributes this decline to a drop in traffic and underperformance of carryover styles. Despite ongoing cost-cutting measures and strategic efforts to revitalize Gucci, Kering no longer anticipates margin improvements in the second half of the year. The company is also facing broader market challenges, with decreased sales in Asia Pacific, North America, and Europe, though it saw a notable increase in Japan. Kering's executives emphasize continued investment in brand development and efficiency improvements to navigate the challenging landscape.

Kering issues new profit warning after net profit halved in H1